Continuing to lose ground, J.C. Penney Co. Inc. on Thursday reported declines in sales and earnings for the fourth quarter, though the results beat Wall Street expectations.
On a bright note, Penney’s pumped up its team by announcing a new chief merchant, Michelle Wlazlo from Target, and filled two other key slots.
Income for the fourth quarter fell to $75 million, or 24 cents per share, compared to net income of $242 million, or 77 cents per share in the same period of 2017.
Adjusted net income was $57 million, or 18 cents per share, compared to adjusted net income of $160 million, or 51 cents per share, last year.
Total sales for the fourth quarter decreased 9.5 percent to $3.67 billion compared to $4.05 billion for the fourth quarter last year. Jewelry, women’s apparel, children’s apparel and men’s apparel were the top performing divisions. On a shifted basis, which compares the 13 weeks ended Feb. 2, 2019, and Feb. 3, 2018, comparable sales decreased 4 percent. On an unshifted basis, comparable sales decreased 6 percent.
Wall Street had been expecting sharper declines in sales and per share earnings.
Wlazlo was named executive vice president, chief merchant, reporting to Jill Soltau, chief executive officer. She has 30 years of merchandising and stores experience from a variety of apparel and accessory retailers. Most recently, she served as senior vice president of apparel and accessories merchandising at Target Corp. where she helped transform the presentation of 1,400 stores and launched 15 new private brands. Prior to Target, Wlazlo worked different divisions of Gap Inc., Saks Fifth Avenue and Bebe Stores.
Two additional key senior executive positions were filled. John Welling was named senior vice president, planning and allocation, and Mark Stinde was named senior vice president, asset protection.
For 2018, Penney’s net loss was $255 million, or 81 cents per share, compared to a net loss of $118 million, or 38 cents per share last year. Adjusted net loss was $296 million, or 94 cents per share, compared to last year’s adjusted net income of $31 million, or 10 cents per share. Total sales for 2018 were $11.67 billion versus $12.55 billion in 2017. Comparable sales decreased 3.1 percent.
The company will close 18 full-line stores in 2019, including the three locations previously announced in January. In addition, nine ancillary home and furniture stores are closing.
“For the past few months, I have met with and listened to J.C. Penney associates throughout the organization, as well as our valued suppliers, customers and other partners, to gain their candid perspectives on our company, both positive and constructive. Based on everything I have seen and heard, I am even more convinced that J.C. Penney is a revered brand that has the capacity to deliver improved results,” Soltau said. “In spite of our past financial performance, we have already taken meaningful steps to drive improvement in key businesses such as women’s apparel, active apparel, special sized apparel and fine jewelry.
“As we forge a path to sustainable profitable growth, our decisions included eliminating non-core and low gross margin product categories, significantly reducing unproductive inventory and continuing the revitalization of our women’s apparel business. While we are pleased with these actions, we know we need to move faster to reestablish the fundamentals of retail, build capabilities focused on satisfying our customers’ wants and needs and ensure that our digital and store operations operate seamlessly to provide an experience that wins with customers. We have much work to do to position J.C. Penney for success and create long-term value for our shareholders, however our unwavering focus and discipline is already enabling meaningful progress.”
Among the recent steps taken, Penney’s eliminated major appliances and a big and tall subscription service.